Nationally, home prices cool but appreciation remains strong
Question: Allison, what can we expect regarding real estate appreciation? You have mentioned that the Summit County market remains very strong but I am wondering what it is like nationally.Answer: The growth in single-family home prices continued to cool in the first quarter, but many metropolitan areas are still showing double-digit annual gains, according to the latest survey by National Association of Realtors (NAR). At the same time, metro area condo price appreciation has generally cooled to normal levels.The association’s first-quarter metro area single-family home price report, covering changes in 149 metropolitan statistical areas, shows 60 areas with double-digit annual increases and 16 metros experiencing price declines.The national median existing single-family home price was $217,900 in the first quarter, up 10.3 percent from a year earlier when the median price was $197,600. The median is a typical market price where half of the homes sold for more and half sold for less. In the fourth quarter of 2005, the annual rate of home-price appreciation was 13.6 percent.David Lereah, NAR’s chief economist, said the market is responding to the improvements in inventory. “With the supply of homes picking up very nicely in many areas of the country, pressure is coming off of home prices,” he said. “By the time we report second quarter data, I expect most areas will be returning to normal rates of price growth in the single-digit range. Consumers generally can expect normal price appreciation for the foreseeable future, providing solid returns over time.”Metro area condominium and cooperative prices, covering changes in 56 markets, show the national median existing condo price was $224,100 in the first quarter, up 5.2 percent from a year earlier. Twenty-seven metros showed double-digit annual gains in the median condo price, and five areas had declines.NAR President Thomas M. Stevens said inventories have picked up more strongly in the condo sector. “Although we continue to have areas of hot growth, we’re finding more broadly balanced conditions across the country in the condo market,” said Stevens, senior vice president of NRT Inc. “Condos have good fundamentals given the demographics of buyers, with baby boomers focused on the high end and their kids on more affordable units. However, in a handful of areas where there may be an oversupply, prices may level-out, so the longer your time horizon the better your investment,” Stevens said.The national condo price is higher than the median single-family home price because there is a high concentration of condos in the most expensive metropolitan areas. Within a given area, the typical single-family home costs more than the median condo price. Capital gains extension passedQuestion: Joyce, can you tell me if the lower 15 percent capital gains tax rate was extended in the recently signed tax bill?Answer: U.S. House and Senate conferees, after more than four months of deliberation, agreed to a $70 billion tax reconciliation bill (H.R. 4297) that includes an extension of the current capital gains tax rate. It passed both houses of Congress on largely party-line votes and President Bush signed it. The legislation extends the 15 percent capital gains tax rate and the $100,000 expensing deduction through December 31, 2010 and provides relief from the Alternative Minimum Tax (AMT) for the 2006 tax year. The legislation also includes about a dozen very narrow, industry-specific clarifications. Another 14 provisions, none of which affect real estate, are included to raise additional new federal revenues. A second tax bill is expected that would extend such popular provisions as the research and development tax credit, 15-year life for leasehold improvements, and deductions for brownfield cleanup expenditures. The timing and revenue raiser requirements for that bill are unknown. For answers to your real estate questions, call Joyce or Allison at (970) 468-6800 or 1-800-262-8442. Email Info@SummitRealEstate.com or visit their website at http://www.SummitRealEstate.com. Allison and Joyce are both long time locals in Summit County. Summit Real Estate – The Nenninger/Simson Team is located at the Dillon Ridge Marketplace. Their long-time residency and years of real estate experience can help you make the most of any buying or selling situation. Both are Certified Residential Specialists (CRS), the highest designation awarded to a Realtor in the residential sales field. Their philosophy is simple, whether buying or selling, they understand that the most important real estate transaction is yours.
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